Orascom Telecom: continued resistance to Canadian market entry and changes at the top

Shaw Communications: joining the opposition to Orascom's Canadian market entry

A recent DevelopingTelecomsWatch article reported on the challenges faced by Orascom Telecom-backed nascent Canadian cellco Globalive Wireless as it seeks to intrude upon what its CEO has described as the "oligopoly" of incumbent players Rogers Wireless, Bell Mobility and Telus. We noted that the Wind-branded operator has fallen foul of foreign ownership despite Orascom Telecom supremo Naguib Sawiris having been, in the words of Terence Corcoran of the National Post, "led... into bidding for spectrum and a major role in the Canadian wireless market" only to have the carpet pulled out from under his company.

As debate rages about how poorly consumers might be served by keeping Globalive out of the country's wireless market, Telus, which is estimated by WCIS to account for around 29% of Canadian mobile subs, is urging Industry Minister Tony Clement not to overturn the CRTC ruling which has stymied the prospective new entrant's plans.

According to Steven Chase, writing today for the Globe and Mail, Telus is arguing that a relaxation of the foreign ownership rules would be unfair "because other companies stayed within existing ownership rules when bidding for frequencies in the 2008 wireless spectrum auction." Telus, which also offers wireline telephony, broadband and TV services, has joined forces with another telco headquartered in Western Canada, Shaw Communications, to publish an open appeal to Mr. Clement in the press.

Chase writes that the two operators are asking the Minister to ignore calls to reverse the October 29th decision by the CRTC. It would send "a very bad message to companies that complied with the Canadian ownership laws as they were required to do in the auction and spent over $4-billion bidding - that the rules can be changed at any time in the game," Michael Hennessy, Telus's SVP of Regulatory and Government Affairs, said in an interview.

The CEO of Rogers Communications, meanwhile, has made it clear how the wireless arm of his business would respond if the Orascom Telecom-backed startup is indeed unable to launch. The market-leading mobile operation would look to acquire the unused spectrum.

"Spectrum is a very valuable asset," Nadir Mohamed said last Friday after a speech to the Toronto Board of Trade. "It's the real estate of our business, so Rogers would be for sure interested in picking it up. I'm sure others would be."

I sense a few more twists in this tale before it becomes clear what is to become of Orascom Telecom's planned foray into North America. Meanwhile, the overall expansion strategy - of which entry into Canada's surprisingly under-penetrated mobile market was meant to be a part - will continue to be guided by Naguib Sawiris. Orascom Telecom recently announced changes to the management structure which will see Group COO Khaled Bichara promoted to the CEO role and Sawiris taking on the position of Executive Chairman.

"The telecommunication business is continuing to grow and evolve at a rapid pace, and we're reshaping OTH to be a leader in this transformation. Our strategy leverages our core strengths and capitalizes on vastly emerging trends to drive growth and profitability. Khaled is dynamic, energetic and will be able to draw on his... experience... to gear the Group into a more aggressive period of growth and transform OTH into a more innovative, integrated and agile global company," Sawiris said. "I will also remain involved in the businesses with more focus on steering the Group’s strategic growth while guiding and supporting the activities of the senior management team. I believe that the telecom market will see massive consolidation during the coming years, and with the new structure I will be able to devote more time and effort in this direction," he added.

With Sawiris now free to focus more sharply on growth opportunities, it will be interesting to see if the group will continue the taste for adventurous enterprises suggested by its decision to invest in North Korea. Koryolink is a W-CDMA operator in which Orascom Telecom holds a 75% stake. Having launched services in December last year, the company now has around 70,000 subscribers according to Cellular News.

For a glimpse inside the secretive and isolated country, this clip about the launch of the Orascom-backed MNO makes interesting viewing, even if the commentary is impenetrable to non-Koreans:

Orascom Telecom: continued resistance to Canadian market entry and changes at the top